Do Female Directors Matter? Exploring the Link Between Corporate Sustainability Disclosures and Earnings Management in Malaysia
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Wiley Open Access
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| Natura: | Artículo Open Access |
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Wiley
2025
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| author | Md Shamim Hossain Chui Ching Ling Nandana Wasantha Pathiranage Chorng Yuan Fung |
| author_facet | Md Shamim Hossain Chui Ching Ling Nandana Wasantha Pathiranage Chorng Yuan Fung Md Shamim Hossain Chui Ching Ling Nandana Wasantha Pathiranage Chorng Yuan Fung |
| collection | Wiley Open Access |
| contents | Do Female Directors Matter? Exploring the Link Between Corporate Sustainability Disclosures and Earnings Management in Malaysia Md Shamim Hossain Chui Ching Ling Nandana Wasantha Pathiranage Chorng Yuan Fung Corporate Social Responsibility and Environmental Management ABSTRACT This study investigates the moderating role of female directors in the relationship between earnings management and corporate sustainability disclosure among Malaysian listed firms. The sample comprised 100 firms from 2017 to 2022, and the two‐step system generalized method of moments method was employed to test the hypotheses. Corporate sustainability disclosure was assessed using a self‐constructed disclosure index. The findings indicate a positive relationship between earnings management and corporate sustainability disclosure. However, the presence of female directors on the board negatively moderates this relationship, suggesting that they reduce the likelihood of using sustainability disclosure as a means of masking earnings management. The robustness of these findings was confirmed through additional testing. This research highlights the importance of gender diversity on corporate boards as an essential component of effective corporate governance. Increasing the number of female directors could enhance oversight functions and reduce opportunistic behaviors, such as earnings management, leading to more authentic sustainability practices and improved corporate accountability. These results have significant implications for both organizations and policymakers. Organizations should consider achieving a critical mass of female directors to strengthen governance and accountability. Policymakers and regulators might use these insights to develop guidelines that encourage greater board diversity, thereby enhancing overall corporate governance. Furthermore, the study supports Sustainable Development Goal 5 by demonstrating that greater female representation on boards can influence policy and leadership in ways that reduce unethical practices like earnings management, thereby promoting ethical conduct and sustainability. 10.1002/csr.3113 http://onlinelibrary.wiley.com/termsAndConditions#vor |
| doi_str_mv | 10.1002/csr.3113 |
| format | Artículo Open Access |
| id | wiley_oa_10_1002_csr_3113 |
| institution | Wiley Open Access |
| license_str_mv | http://onlinelibrary.wiley.com/termsAndConditions#vor |
| publishDate | 2025 |
| publisher | Wiley |
| record_format | wiley_oa |
| spellingShingle | Do Female Directors Matter? Exploring the Link Between Corporate Sustainability Disclosures and Earnings Management in Malaysia Md Shamim Hossain Chui Ching Ling Nandana Wasantha Pathiranage Chorng Yuan Fung Corporate Social Responsibility and Environmental Management Do Female Directors Matter? Exploring the Link Between Corporate Sustainability Disclosures and Earnings Management in Malaysia Md Shamim Hossain Chui Ching Ling Nandana Wasantha Pathiranage Chorng Yuan Fung Corporate Social Responsibility and Environmental Management ABSTRACT This study investigates the moderating role of female directors in the relationship between earnings management and corporate sustainability disclosure among Malaysian listed firms. The sample comprised 100 firms from 2017 to 2022, and the two‐step system generalized method of moments method was employed to test the hypotheses. Corporate sustainability disclosure was assessed using a self‐constructed disclosure index. The findings indicate a positive relationship between earnings management and corporate sustainability disclosure. However, the presence of female directors on the board negatively moderates this relationship, suggesting that they reduce the likelihood of using sustainability disclosure as a means of masking earnings management. The robustness of these findings was confirmed through additional testing. This research highlights the importance of gender diversity on corporate boards as an essential component of effective corporate governance. Increasing the number of female directors could enhance oversight functions and reduce opportunistic behaviors, such as earnings management, leading to more authentic sustainability practices and improved corporate accountability. These results have significant implications for both organizations and policymakers. Organizations should consider achieving a critical mass of female directors to strengthen governance and accountability. Policymakers and regulators might use these insights to develop guidelines that encourage greater board diversity, thereby enhancing overall corporate governance. Furthermore, the study supports Sustainable Development Goal 5 by demonstrating that greater female representation on boards can influence policy and leadership in ways that reduce unethical practices like earnings management, thereby promoting ethical conduct and sustainability. 10.1002/csr.3113 http://onlinelibrary.wiley.com/termsAndConditions#vor |
| title | Do Female Directors Matter? Exploring the Link Between Corporate Sustainability Disclosures and Earnings Management in Malaysia |
| topic | Corporate Social Responsibility and Environmental Management |
| url | https://onlinelibrary.wiley.com/doi/10.1002/csr.3113 |